Don’t Let Your Family’s Death Benefits Go Unclaimed

Millions of dollars in life insurance death benefits go unclaimed every year. Don’t let this happen to your loved ones.

Some shocking statistics:

New York Life paid $3 billion in unclaimed death benefits in the year 2010 to families of individuals insured with them.

Residents of New York State (eligible to receive claim checks because of legitimate unclaimed death benefit amounts in their name) received more than $16 million in payouts from life insurance companies.

States of New York, California, Pennsylvania and Florida were all part of a citizen campaign to return due death benefits to the rightful beneficiaries or claimants in 2010 (Some insurance companies that settled these bills included Prudential, John Hancock and MetLife.)

Why do life insurance companies not make it a point to send a death benefit check to the beneficiaries when their policy holders die?

Life insurance companies argue that they do not have enough information about the beneficiaries to be able to contact them directly. Beneficiaries don’t always live in the same house as the policy holder (children move out and have their own families, older spouses are often in retirement homes). Most life insurance policies last ten years or longer, and a lot can happen in ten years!

Some would argue that agents ought to keep in touch with clients they’ve sold policies to. In fact, many good agents do that on a regular basis. However, it should be noted that agents are also doing a job. They change jobs too, move to different cities or switch companies they work with. And after all, shouldn’t it be up to the policy holder to make a will or share information about such an important financial instrument that can help his or her loved ones if something happened? Because every concerned party is making so many assumptions, it can be easy for death claims to fall through the cracks.

Life insurance companies expect beneficiaries to file for death claims, along with information about the death and copies of the death certificate. Every death event is scrutinized for false claims, like suicide or designed murder to collect death benefits. This makes sense because it allows the policy holder (who pays to keep the policy active) to decide how they would want to share information with their beneficiaries. Some families would like to keep things hushed, revealing only at the last moment through the word of a lawyer who is given the final say in how matters are to be wrapped up. Other families are open and transparent in their communication, and beneficiaries who will be sharing the death benefit do so without giving the insured a hard time about divisions of money among beneficiaries. If you believe someone in your family had a life insurance policy on them that has gone several years without anyone rightfully claiming the death benefits, use one of the look up services that can professionally help you locate the policy. The MIB Group offers one for a fee that includes a large database of information.

You can find more help at consumerreports.org. If you have trouble sharing your policy information with family or loved ones, talk to a financial adviser you trust, share details with your family lawyer or keep policy information in a secure place that your family can have access to when you’re gone. Make sure you’re sharing information about your own life insurance policy with someone you trust.